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4th New York Metro Area Networking Workshop 2004
A Pricing Model of GPRS
Networks with Wi-Fi Integration
Saravut Yaipairoj (Speaker)
Dr. Fotios C. Harmantzis
Vinoth Gunasekaran
PerfEcNet Research Group
Telecommunications Management
Stevens Institute of Technology
Hoboken, NJ USA
[email protected]
www.stevens.edu/perfectnet
9/10/2004
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4th New York Metro Area Networking Workshop 2004
Agenda
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GPRS vs Wi-Fi
Deployment of Wi-Fi Networks
Architectures of GPRS networks with Wi-Fi
integration
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Pricing model of GPRS integrated with Wi-Fi
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Tight coupling
Loose coupling
Demand functions
Revenue from integrated and non-integrated
networks
Price setting for Wi-Fi connection fee
Numerical results
Conclusion
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4th New York Metro Area Networking Workshop 2004
GPRS vs Wi-Fi
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For certain wireless services, technologies being used
for different applications can now be seen as
alternative solutions.
GPRS offers:
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Wi-Fi offers:
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wide service coverage
Costly and limited transmission rate
more economical services, higher transmission rate
limited coverage.
By integrating both technologies, network operators
can offer broadband wireless services that are
comparable to 3G (3G-like services)
Clearly, the integration would complicate the pricing
issues.
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4th New York Metro Area Networking Workshop 2004
Deployment of Wi-Fi Networks
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Home and businesses
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Micro carriers
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The service is offered without charge.
The possibility of users open up their
access points for public=>requires
sophisticated pricing scheme.
Starbucks, Border bookstores
The carriers set up their own access
points and maintain customer and
billing relationship with subscribers
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4th New York Metro Area Networking Workshop 2004
Deployment of Wi-Fi Networks
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Wi-Fi startups
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Wi-Fi services offered by cellular
operators
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Boingo, Wayport
The operators aggregate the networks
provided by micro carriers and provide single
access to the end users.
The operator partner with the micro-carriers or
aggregators or they can roll out their own WiFi networks.
The operator can offer services comparable to
3G
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4th New York Metro Area Networking Workshop 2004
Architecture of GPRS integrated with
Wi-Fi networks: Tight coupling
HLR
MS
GPRS
RAN
External Packet Data
Network
SGSN
GPRS Core
GGSN
SGSN
WLAN
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Tight coupling architecture=>the WLAN is
connected to the GPRS core network in the same
manner as any other radio access networks (RAN).
The WLAN data traffic goes through the GPRS core
network before reaching the external PDNs
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4th New York Metro Area Networking Workshop 2004
Architecture of GPRS integrated with
Wi-Fi networks: Loose Coupling
WLAN
HLR
MS
GPRS
RAN
SGSN
GPRS Core
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GGSN
SGSN
External Packet Data
Network
Loose Coupling Architecture=>WLAN is deployed
as an access network complementary to the GPRS
network. The WLAN utilize the user databases in
the GPRS network but feature no data interfaces
to GPRS core network. Wi-Fi data traffic goes
directly to the operator’s IP network or External
PDNs.
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4th New York Metro Area Networking Workshop 2004
Pricing model for GPRS with Wi-Fi
integration
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The cost of transferring data over
GPRS networks is much higher than
that of Wi-Fi networks
GPRS networks are more convenient
to users since the network has larger
coverage
Pricing of their services will influence
the usage in each network.
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4th New York Metro Area Networking Workshop 2004
Pricing model for GPRS with Wi-Fi
integration (cont.)
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A User is initially in the
GPRS coverage. The user
has two options: he can
either transfer data over
GPRS network paying
higher price, or he can
search for Wi-Fi hotspots
and pay flat connection
fee.
There will be one
common AAA server and
billing system maintained
by the cellular operators
for all integrated hotspots
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4th New York Metro Area Networking Workshop 2004
Demand function
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The ratio between the price charged by GPRS
netoworks and price charged Wi-Fi will
determine the usage of each networks=>the use
of demand function.
Demand function describes the reaction of users
to the change of price [Odlyzko]
De
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[
pg
pw
1]2
0  D 1
p g  pw
(1)
Pg and Pw are price charged by GPRS (usage
charge) and Wi-Fi (connection fee) respectively,
D is the percentage of users willing to pay Pg
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4th New York Metro Area Networking Workshop 2004
Demand function (cont.)
p g  rg  v
p w  rw
(2)
rg = charging rate per
MB for GPRS network
rw = connection fee
for Wi-Fi hotspots
v = session volume in
MB
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4th New York Metro Area Networking Workshop 2004
Revenue from integrated networks
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The average revenue due to integration can
be determined by the weighted sum of the
revenue created by the GPRS networks and
Wi-Fi networks based on their
corresponding demand.
Rint  D  (rg  v)  (1  D)  rw
(3)
Rint=Average revenue of GPRS integrated
with Wi-Fi ($/user/connection)
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4th New York Metro Area Networking Workshop 2004
Demand for GPRS network without Wi-Fi
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In this case, the GPRS
users do not have an
alternative to migrate
their traffic. The user
demand using nonintegrated GPRS network
would be higher than
that with integration.
Dw.o.int 
1 (
1
pg
K
 1)
4
(4)
K is a constant
Average revenue of non-integrated GPRS =>
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Rw.o. int  Dw.o. int  (rg  v)
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(5)
4th New York Metro Area Networking Workshop 2004
Wi-Fi connection fee (price setting)
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Wi-Fi connection fee influences GPRS users to transfer
their traffic in a more economical Wi-Fi networks,
which improves the GPRS performance by offloading
traffic into Wi-Fi networks.
The connection fee can be obtained from the demand
function described earlier
rw 
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rg  v
1   ln D
(6)
To obtain the optimal Wi-Fi connection fee for certain
user demand, the distribution of session volume (v)in
GPRS networks with integration is required.
Kilpi shows that the GPRS sessions for more than 2MB
are very few.
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4th New York Metro Area Networking Workshop 2004
Numerical results
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Assumptions
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Users want to transmit relatively big files
(>500kB)
Usage charge of GPRS networks is fixed at
$6/MB
Wi-Fi connection fee is flat. Users can transmit
or receive as much traffic as they want during
a connection.
For integrated networks, users have access to
Wi-Fi hotspots if they seek for them. The only
incentive that drives them to hotspots is
pricing
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4th New York Metro Area Networking Workshop 2004
Numerical Results (cont.)
When usage per connection increases, users would be influenced
By price incentive to transmit their traffic over Wi-Fi hotspots,
Resulting in additional revenue.
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4th New York Metro Area Networking Workshop 2004
Numerical results (cont.)
More
revenue but
less traffic
migration
We could think of Wi-Fi
connection fee that yields
the largest difference
between these two revenue
curves
More
traffic
migration
but less
revenue
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Largest difference
in revenue 17
4th New York Metro Area Networking Workshop 2004
Wi-Fi Connection Fee vs Data Volume
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To offload GPRS traffic
to Wi-Fi, Wi-Fi
connection fees must
be set appropriately
so that they urge
GPRS users to
migrate.
The result illustrates
the price elasticity of
demand for certain
session volume.
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Less sensitive
to the change
in price
More sensitive
to the change
in price
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4th New York Metro Area Networking Workshop 2004
Conclusions
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We propose a simple but effective pricing
model for GPRS networks integrated with
Wi-Fi.
The use of demand function to describe
the response of users based on the price
charged in each network.
By integrating two technologies together,
operators can attract new customers with
value added services provided by Wi-Fi
networks, which reduces the churn.
GSM/GPRS operators can delay their 3G
deployments as the integration could offer
3G-like services.
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4th New York Metro Area Networking Workshop 2004
Future Works
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The optimal Wi-Fi connection fee
charged to GPRS users which
maximizes the overall revenue in
the integrated networks.
The distribution of GPRS session
volume.
The performance improvement of
GPRS networks as a result of traffic
migration to Wi-Fi networks.
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4th New York Metro Area Networking Workshop 2004
Thank you
Saravut Yaipairoj (Speaker)
Dr. Fotios C. Harmantzis
Vinoth Gunasekaran
PerfEcNet Research Group
Telecommunications Management
Stevens Institute of Technology
Hoboken, NJ USA
[email protected]
9/10/2004
www.stevens.edu/perfectnet
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